Do debtors mean you are struggling with cash flow issues? Here are some tips to help architects get paid on time.
Debtors or late paying clients are one of the biggest frustrations for small business owners in the architecture industry. They have a detrimental effect on your business’ cash flow, causing you not only unnecessary stress and worry, but some serious financial concerns.
If late paying clients are the bugbear of your business, you’re not alone. On average, half of all Australian small businesses report that 40 percent of their invoices are paid late. To save yourself the stress and worry, putting systems and processes in place to ensure you get paid on time should be a key priority. By taking the time to implement these, you will find your cash flow becomes more consistent and reliable, in turn helping your business run smoothly all year round. Here are some quick and simple tips to help you get paid fast.
Send an invoice immediately after the work is complete
For busy architects, it can be tempting to put off invoicing until the end of the day, or even the end of the month, and complete it all in one go. But this slows down the payment process, meaning you may not get paid until over a month after a job is complete.
If you create and send an invoice immediately after a job is finished, however, your work is still fresh in the client’s mind. Tools such as mobile invoicing apps allow you to create and send professional invoices from your mobile phone, on the job. Sending a prompt, clear invoice straight to your client’s email or mobile will not only help you get paid faster, but shows you operate a punctual and professional business.
Offer multiple ways to pay
When you send an invoice, it’s important to make sure the payment process is as seamless as possible. One way to do this is by offering your clients a range of payment options, such as credit or debit card, eftpos or direct deposit. Accepting your clients’ preferred payment method makes your service as convenient as possible for them, meaning your invoices get settled faster.
Shorten your payment terms
Even if you submit invoices promptly after a job, some people simply have a habit of paying late. If this is a common problem for your business, consider reducing your payment terms from 30 days to, say, 15 days. For large projects, it’s likely you will bill at multiple stages throughout the project. Even if you’re requesting monthly or bimonthly payments, it increases the likelihood of your clients paying on time when they see the deadline is soon. This can even save you valuable time chasing overdue payments down the track.
Follow up with overdue payments
Even with these systems in place, the reality is that some clients still won’t pay you on time. When this happens, it’s important to follow up with a gentle reminder when payment is overdue. More often than not, settling the invoice will have simply slipped the client’s mind, so a polite nudge may just be the reminder they need.
Late paying clients can cause many headaches for architects, from poor cash flow to unnecessary stress. But by setting up a few straightforward processes, you will find your cash flow becomes more consistent and reliable, and late payment can become more of an occasional inconvenience, than a monthly problem.
Chris Strode is the founder of Invoice2go, a mobile invoicing app that gives small businesses and contractors control over their time and business. As a small business owner from a family of tradespeople, Strode created Invoice2go out of frustration with the lack of simple invoicing options available. For more visithttp://invoice.2go.com.
This article first appeared in AR162.